Adani Group starts first bond buyback after Hindenburg report

Adani Ports & Special Economic Zone plans to buy back $130m of its July 2024 bonds

Gautam Adani, billionaire and chairman of Adani Group. His business empire was rocked by allegations of fraud by short seller Hindenburg Research. Bloomberg

Adani Group bonds rose after a key company started the first debt buyback by Indian billionaire Gautam Adani’s conglomerate since it was targeted by a short seller in January.

Adani Ports & Special Economic Zone said it plans to buy back as much as $130 million of its July 2024 bonds and similar amounts in each of the next four quarters, as it tries to show that its liquidity position is comfortable, the company said in a stock exchange filing.

Prices for 10 out of 15 dollar-denominated notes of Adani Group companies tracked by Bloomberg rose as of 11:27am in Hong Kong on Monday.

That was led by a 0.69 cent on the dollar gain of Adani Ports’ July 2024 3.375 per cent senior debt, the biggest advance in a month.

The buyback would mark another effort by the group to regain investor confidence, including trimming capital spending, after a Hindenburg Research report pounded its bonds and shares.

Adani Ports’ “measured pace” of repaying debt should enable it to maintain its revised capital spending target of 40 billion to 45 billion rupees ($548 million) in the fiscal year started this month, according to Bloomberg Intelligence.

“Adani Ports’ plan to halve capital spending and prepay 50 billion rupees of debt could alleviate refinancing concerns ahead of major maturities in 2024,” BI analyst Denise Wong wrote in a report dated April 24.

But those steps “will impede the company’s ability to boost earnings growth via infrastructure expansion and M&A”.

Concerns also remain about $6 billion worth of Adani bonds facing the possibility of being downgraded to high-yield debt, in what is known as fallen-angel risk, BI analyst Sharon Chen wrote in a separate report.

She said that Adani Ports might be less pressured than the group’s utilities companies, given its strong cash flows.